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PE Glossary

IRR (Internal Rate of Return)

IRR · The annualized return on an investment, accounting for the timing and size of cash flows. Net IRR (after fees and carry) is the standard measure for comparing PE fund performance.

Example

A fund invests €100M in a deal in 2018 and exits for €250M in 2024. The IRR (factoring in the six-year hold period) is approximately 16.5% annualized · materially different from the 2.5x money multiple, which ignores the time value of money.

Related terms

MOIC (Multiple on Invested Capital)TVPI (Total Value to Paid-In)DPI (Distributions to Paid-In)
All glossary terms

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